By Brian Hefty
If you can tell me what the grain markets will do, I can tell you almost exactly what will happen with input costs in 2013. Almost all ag. inputs are priced based on what the market will bear, and the market can obviously bear higher costs if revenues are up. By the same token, the market can bear less if revenues are down. Since I have no idea what will happen to the grain markets, it’s hard for me to say with exact certainty what will happen going into next year, but here is what I’m hearing in the industry so far with seed, crop protection, and fertilizer prices for 2013.
SEED – Expect a small increase, maybe 3% to 5%. Keep in mind, 5% on $250 corn is $12.50 per bag, so this still adds up. Also, I would look for the newest, hottest varieties to be up more, with some of the older numbers flat to possibly even down. Every seed company wants to take prices up due to higher production and processing costs in 2012, but I don’t see the price increases to be outlandish. I have gotten a few calls from farmers who want to carry some seed into next year, but I would caution you against this. If you buy seed now, you’ll pay the full, in-season price. If you wait until September to buy, you’ll most likely get a 9% to 11% cash discount. In other words, unless the price goes up at least 10%, you’ll actually be paying more for your seed now compared to in September. Plus, carryover seed will not be warrantied for germination, seed quality, or other replant benefits. I just don’t believe it’s worth the risk.
CROP PROTECTION – This market will be varied. Expect glyphosate to be up at least 10% to 20% over last fall. Glyphosate has been short around the world for the last month, and manufacturers will use this to continue to bump the price. Don’t get too worried, though. Keep in mind that even a 20% increase on a $2 per acre product is only 40 cents. Most other ag chemicals will be up 2% to 5%, if at all. Expect some of the products that have many generic alternatives to actually come down in price. Products like Arrow (volunteer corn/grass herbicide), Harass (generic Harmony GT), Silencer (pyrethroid insecticide), Banvel, and Bumper (fungicide) should continue to push down the cost of many other herbicides. In total, I doubt your ag chem bill in 2013 will be any higher than in 2012. However, with the increase in glyphosate-resistant weeds, you may need more herbicides to get the same weed control you’ve had in the past.
FERTILIZER – This is the big one, and it’s the most unpredictable. Let me first say that I personally believe lack of soil fertility is the number one reason yields are not higher on most farms in the U.S. If you look at some of the very high yield producers in the past like Herman Warsaw (first farmer in the U.S. to reach 300 bushel corn back in the 1970’s) and Francis Childs (first to reach 400 bushel corn), their fertility levels were very high down to 2 feet or more in the soil profile. Not only do most farms need a lot more fertility, the balance of nutrients is often out of whack. For example, if you have been fertilizing with just N, P, and K, have you considered sulfur, boron, zinc, manganese, iron, or copper? While these “other” nutrients don’t get a lot of press, they are just as important to your crop as N, P, and K, although they are needed in much smaller quantities. Remember that if you want to raise 300 bushel corn, 100 bushel soybeans, or 150 bushel wheat someday, your yields will never reach those levels unless ALL nutrients are sufficient, not just N, P, and K. All that being said, unfortunately I don’t feel that fertilizer will be any less expensive this fall vs. last fall. There may be a short time this summer where fertilizer is a little less expensive, but it will most likely bump back up again in the fall. Just like we saw a few years ago, it’s possible fertilizer could be less expensive next spring than this fall, but again, about the only way that happens is if commodity prices go down.